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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (13432)	5/10/1999 4:29:00 PM
From: John Pitera	Respond to of 99985

Heinz, Great post, hard to believe with crude rallying 80% that Larry Kudlow and many other talking heads have been on TV saying that there is no inflation. The expansion of the military budget , mimicking the "guns and Butter" era or the 1960's is an inflationary development as well. This is what economists must call "Lag time" -ng-

To: pater tenebrarum who wrote (13432)	5/10/1999 6:07:00 PM
From: dennis michael patterson	Read Replies (3) \| Respond to of 99985

Heinz, I sometimes think Martin Armstrong is a character out of a Berhnard play. Heute hat er so gesagt: The bull market is not over. Unlike Tokyo in 1989, the foreign buyers are not here in force. In fact, they remain on the sidelines waiting to see blood in the streets. All bull tops involve a concentration of international capital. That is just not the case at this moment. We do not see a major collapse as was the case in 1929. At best we see a pause followed by a resumption of the bull market where the Dow will one day reach the 19,000 - 20,000 zone.

To: pater tenebrarum who wrote (13432)	5/10/1999 7:18:00 PM
From: wmwmw	Read Replies (2) \| Respond to of 99985

1. Crude does affect inflation, as it raise cost, but it's minor impact, since the major cost is workers cost. 2. If products of the society increased, increasing printed money doesn't result in inflation as long as they grow at same rate. 3.AG never said he doesn't believe "new era", he was just conservative in a conclusion - " the evidences were compelling but not conclusive". 4. As for "greater fool", we can't judge only from market price to say whether it is too high or too low. To find a top you need to have extensive economic knowledge that you can predict that economy has reached its limit, that the current expectations are too high, that firms are not going to make the projected profits. Not from the fact that the market rose from 9500 to 11000 within one or two months. Stocks price increases have two basic reasons: people think a company will make more money therefore buy it, which is fundemantal reason; people see the stock price going up so to expect it to go up further therefore buy it, which is psychological reason; The "greater fool" happens in the second situation. In this situation a stock is difficult to evaluate. People may only know a stock has great potential but they can't measure how much it would be, then the "greater fool" may happen. A company earnings drop significantly and stock cut half, still not oversold because people have fundamentals as evaluation base, the stock will not bounce much. A company with very good earnings and stock go up 40%, still not overbought, for the same reason. In both situations there will not be much 'great fool" because people have fundemantals to evaluate the stocks. A company launch a web site, or a drug company get FDA approval, there are higher chance of "great fool" because people don't have a clear measure of those potential, thus may be more influnced by price change itself - if the price rise, more people buy, if the price drop, more people sell. Not that greed or fear cause that, but people can't find something else to judge. So, what pushed the market from 9500 to 11000? The companies earnings. The strong fundemantals. Not " great fool". I am not saying in this situation there is no profit taking, but its down side swing is relatively small.